STAND-BY ARRANGEMENT TO IMPROVE CROATIA'S FINANCIAL POSITION

ZAGREB, March 29 (Hina) - Croatia is likely to improve its financial position and lessen its internal debt after the International Monetary Fund approved a stand-by arrangement to Zagreb ten days ago, read a monthly analysis of economic indicators of central and eastern European countries, which the Austrian Raiffeisen Zentralbank (RZB) has made.#L# Croatia's negotiations with the European Union on a Stabilisation and Association Agreement (SAA) also enhance the country's rating, RZB analysts assess. They added that earlier this month Croatia issued bonds, worth 500 million euro, which should cover a part of this year's budgetary deficit. If Zagreb sells 16 percent of shares of 'Hrvatski Telekom' (the Croatian Telekom) to Deutsche Telekom for one billion German marks prior to the continuation of the privatisation process, the budgetary deficit could be covered entirely and there would be no need for the issuance of any more state bonds, the Austrian analysts said. They also pointed to a new bill on the Croatian National Bank (HNB), which is currently in the parliamentary procedure and which will make it possible for the central bank to enjoy greater independence and ban any kind of loans to be granted to the government. A deficit in Croatia's trade with other countries is expected to be stabilised in the course of this year, after it was substantially reduced last years because of a high inflation rate and considerable earnings from tourism, RZB analysts said. They assess that the rate of the growth of the Gross Domestic Product (GDP) would be somewhat weaker in contrast to last year when it came to 3.8 percent. This year the analysts envisage the GDP will rise by 3.4 percent. (hina) ms